STRATEGIC CASE TUDY

OVERVIEW OF STRATEGY
DAVID ABBAM ADJEI
LEARNING OUTCOMES
After reading this chapter you should be able to:
1. Identify and describe the strategy of a business enterprise.
2. Distinguish between corporate, business and functional
strategies.
3. Understand how strategy is made within organizations
INTRODUCTION
This Chapter examines the practical implications of the definitions
of strategy; distinguishes between different levels of strategy; and
explains how to summarise an organisation’s strategy in a ‘strategy
statement’.
Strategy is difficult to define; it is a topic with several different
aspects and the word is used to mean several different things.
We are concerned with its meaning in relation to the higher
management of organisations.
The following definitions would be explored
Henry Mintzberg, 1987
Mintzberg is a noted management thinker and prolific writer on
strategy. Mintzberg provides five definitions of strategy with 5Ps:
 Plan
 Ploy
 Pattern
 Position
 Perspective.
Strategy is a plan
Strategy as a plan, is some sort of consciously intended course of
action, or set of guidelines to deal with a situation.
By this definition strategies have two essential characteristics:
1. They are made in advance of the actions to which they apply,
and
2. They are developed consciously and purposefully.
Strategy is a ploy
A strategy can be a ploy. It is a specific manoeuvre or scheme or
trick intended to outwit an opponent or competitor.
Here, the strategy is planned and executed with a specific intention
to beat and outperform the competition in the market by gaining the
competitive edge or advantage.
With a strategy as a ploy, the organizations can come up with
something very bizarre and unexpected and surprise the market
environment that also creates the waves of commotion within the
minds of the competitors.
Strategy as a Pattern
If strategies can be intended (whether as general plans or specific
ploys), they can also be realised
Strategy is a pattern - specifically, a pattern in a stream of actions.
Strategy is consistency in behaviour, whether or not intended. The
definitions of strategy as plan and pattern can be quite independent
of one another: plans may go unrealised, while patterns may appear
without preconception.
Plans are intended strategy, whereas patterns are realised
strategy.
From the above, we can distinguish deliberate strategies, where
intentions that existed previously were realised, and emergent
strategies where patterns developed in the absence of intentions,
or despite them.
Strategy as a position
Strategy as a position, is specifically a means of locating an
organisation in an "environment".
By this definition strategy becomes the mediating force, or "match",
between organisation and the environment, that is, between the
internal and the external context.
In this regard, Strategy is essentially a descriptive idea that includes
an organization’s choice of position and its primary decision rules for
coping with that position.
Strategy as a perspective
Strategy is a perspective or viewpoint shared by members of an
organisation, through their intentions and / or by their actions.
In effect, when we talk of strategy in this context, we are entering
the realm of the collective mind - individuals united by common
thinking and / or behaviour.
This definition argues that more than anything, strategy is a
concept.
The essential proposition of this argument is that all strategies are
ideas that occur only in the minds of “interested parties - those
who pursue them, are influenced by that pursuit, or care to
observe others doing so”.
This means that strategy as perspective can be seen more in the
consistency of the behaviors of the organization’s members rather
than in the expression of intent.
Johnson, Scholes, Whittington, Angwin and Regnér, 2017
Before providing a definition for strategy, Johnson et al. made
reference to definitions of strategy by other prominent writers.
According to Chandler, strategy is ‘…the determination of the long-
run goals and objectives of an enterprise and the adoption of courses
of action and the allocation of resources necessary for carrying out
these goals’
According to Drucker, strategy is ‘a firm’s theory about how to gain
competitive advantages’
According to Porter, strategy ‘is about being different. It means
deliberately choosing a different set of activities to deliver a
unique mix of value’
They also made reference to Mintzberg who defined strategy as ‘a
pattern in a stream of decisions’
Each of the above definitions points to important elements of
strategy
Chandler emphasises a logical flow from the determination of
goals and objectives to the allocation of resources.
Porter focuses on deliberate choices, difference and competition.
Drucker suggests that it is a theory about how a firm will win.
Mintzberg, however, takes the view that strategy is less certain
and uses the word ‘pattern’ to allow for the fact that strategies do
not always follow a deliberately chosen and logical plan, but can
emerge in more ad hoc ways.
Johnson et al, summarised the above and provided that strategy is
‘the long-term direction of an organisation’.
The definition of Johnson et al has two advantages.
First, the long-term direction of an organisation can include both
deliberate, logical strategy and more incremental, emergent patterns
of strategy.
Second, long-term direction can include both strategies that
emphasise difference and competition, and strategies that recognise
the roles of cooperation and even imitation.
The three elements of strategy definition, provided by Johnson et al,
are the long term, direction and organisation
The long term
Strategies are typically measured over years, for some organisations a
decade or more. The importance of a long-term perspective on strategy
is emphasised by ‘three horizons’ framework.
The three-horizons framework suggests organisations should think of
themselves as comprising three types of business or activity, defined
by their ‘horizons’ in terms of years.
Horizon 1 (i.e. one ˃). These businesses are basically the current core
activities. Horizon 1 businesses need defending and extending, but the
expectation is that in the long term they will likely be flat or declining
in terms of profits (or whatever else the organisation values).
Horizon 2 (i.e. two ˃). These businesses are emerging activities
that should provide new sources of profit.
Horizon 3 (i.e. three ˃). Finally, there are Horizon 3 possibilities, for
which nothing is sure. These are typically risky research and
development (R&D) projects, start-up ventures. Horizon 3 might
generate profits a few years from the present time.
While timescales might differ, the basic point about the ‘three-
horizons’ framework is that managers need to avoid focusing on the
short-term issues of their existing activities.
Strategy involves pushing out Horizon 1 as far as possible, at the
same time as looking to Horizons 2 and 3.
Strategic direction
Over the years, strategies follow some kind of long-term direction
or path.
Sometimes a strategic direction only emerges as a coherent pattern
over time.
Typically, however, managers and entrepreneurs try to set the
direction of their strategy according to long-term objectives.
In private-sector businesses, the objective guiding strategic
direction is usually maximising profits for shareholders.
However, profits do not always set strategic direction. First, public-
sector and charity organisations may set their strategic direction
according to other objectives: for example, a sports club’s objective
may be to move up from one league to a higher one.
Second, even in the private sector profit is not always the sole
criterion for strategy. Thus family businesses may sometimes
sacrifice the maximisation of profits for family objectives, for
example passing down the management of the business to the next
generation.
The objectives behind strategic direction always need close scrutiny.
Organisation.
Organisations involve many relationships, both internally and
externally. This is because organisations typically have many
internal and external stakeholders, in other words people and
groups that depend on the organisation and upon which the
organisation itself depends.
Internally, organisations are filled with people, typically with
diverse, competing and more or less reasonable views of what
should be done. In strategy, therefore, it is always important to
look inside organisations and to consider the people involved and
their different interests and views.
Externally, organisations are surrounded by important
relationships, for example with suppliers, customers, alliance
partners, regulators and investors.
Strategy therefore is also vitally concerned with an organisation’s
external boundaries: in other words, questions about what to
include within the organisation and how to manage important
relationships with what is kept outside.
According to Johnson et al, the words ‘strategy’ and ‘strategic
decisions’ are therefore, associated with the following issues:
1. The long-term direction of an organisation. Strategy involves long-
term decisions about what sort of company it should be, and
realising these decisions would take plenty of time.
2. Strategic decisions are likely to be concerned with the scope of an
organisation’s activities. It is to do with what they want the
organisation to be like and to be about. The boundaries
3. Advantage for the organisation over competition
4. Strategic fit with the business environment. Organisations need
appropriate positioning in their environment, for example in
terms of the extent to which products or services meet clearly
identified market needs
5. The organisation’s resources and competences. strategy is about
exploiting the strategic capability of an organisation, in terms of
its resources and competences, to provide competitive advantage
and/or yield new opportunities.
6. The values and expectations of powerful actors in and around
the organisation. The beliefs and values of these stakeholders
will have a greater or lesser influence on the strategy
development of an organisation, depending on the power of
each.
LEVELS OF STRATEGY
Strategies exist at a number of levels in an organisation and it is
at the heart of every business.
To help understand strategy in business, we need to look at four
levels of strategy that are typically used by organizations. Only
when all four of these levels are carefully considered will the
business be able to get on the right path toward a prosperous
future.
Corporate Level Strategy
This is concerned with the overall scope and direction of an
organization and how value will be added to the different parts
(business units) of an organization.
It is formulated by the top management and affect the whole
organization.
Corporate-level strategy issues include geographical scope,
diversity of products or services, acquisitions of new businesses,
and how resources are allocated between the different elements of
the organisation.
Corporate strategy deals with three key issues:
1. Directional strategy – the firm’s overall orientation towards
growth, stability and retrenchment.
2. Portfolio analysis – The industries or markets in which the firm
competes through its products and business units
3.Parenting strategy – the manner in which the management
coordinates activities and transfers resources and cultivate
capabilities among product lines and business units.
Business Level Strategy
The second level is business-level strategy, which is about how the
various businesses included in the corporate strategy should
compete in their particular markets
Business level strategies detail actions taken to provide value to
customers and gain a competitive advantage by exploiting core
competencies in specific individual product or service markets.
Business-level strategy typically concerns issues such as innovation,
appropriate scale and response to competitors’ moves.
Business-level strategy is concerned with a firm's position in an
industry, relative to competitors.
So, whereas corporate-level strategy involves decisions about the
organisation as a whole, business level strategy decisions relate to
particular strategic business units (SBUs) within the overall
organisation.
A strategic business unit is a part of an organisation for which there is
a distinct external market for goods or services that is different from
another SBU
Firms choose from among two main business-level strategies to
establish and defend their desired strategic position against
competitors: cost leadership and differentiation.
The purpose of a business-level strategy is to create differences
between the firm’s position and those of its competitors.
Thus, the firm’s business-level strategy is a deliberate choice about
how it will perform the value chain’s primary and support activities in
ways that create unique value.
Where the businesses are units within a larger organisation, business-
level strategies should clearly fit with corporate-level strategy.
Functional Level Strategy
All organizations irrespective of the size, nature and scope of
business must perform the functions like marketing, finance,
production and operations, human resource management Research &
Development etc.
Careful planning, execution and coordination of these functions are
highly essential for effective strategic planning, implementation and
control.
Functional strategies are formulated at the functional /
departmental levels and developed from the business strategy or
corporate strategy. The main functional strategies include
marketing, financial, human resources and production strategies
for the implementation of corporate strategy.
So, for instance to increase market share, the functional level
strategy might include marketing to improve brand recognition,
quality improvement for the end products and the hiring of
specialized personnel.
The functional level approach should have the following key variables:
1. Alignment. The functional strategies must align with business and
corporate strategies alike.
2. Detail. The functional strategy should have a high level of detail
3. Existing Resources. Each functional strategy in place has to use current
resources present in each department, whether they are personnel,
equipment or opportunity
4. Progress. Frameworks to assist in determining whether there is progress
toward these objectives.
Operational Level Strategy
This is at the day-to-day end of the organization which is concerned
with how the components parts of an organization deliver effectively
the corporate or business level strategies in terms of resources,
processes and people.
Operations strategy is a plan specifying how an organization will
allocate resources in order to support infrastructure and production.
Operations strategy has a long-term concern for how to best
determine and develop the firm's major operations resources so that
there is a high degree of compatibility between these resources and
the business strategy.
Through the development of operational strategies, the firm can
evaluate and implement efficient processes and systems for the use
of resources and personnel.
The firm's operations strategy must be conducive to developing a set
of policies in both process choice and infrastructure design (controls,
procedures, systems, etc.) that are consistent with the firm's
distinctive competency.
A major advantage of operational strategy is its focus on
competition. Businesses that lag behind their competitors can
implement company-wide operational strategies to close the gap.
The success of operational strategies are also easy to measure, such
as increased profits, reduced costs and higher market share in the
industry.
Firms that fail to fully exploit the strategic power of operations will
be hampered in their competitive abilities and vulnerable to attack
from those competitors who do exploit their operations strategy. To
do this effectively, operations must be involved throughout the whole
of the corporate strategy.
 APPROACHES TO DEVELOP STRATEGY
Attempts have been made to study and capture the best approaches to
formulate and implement business strategy. That is how do strategies
actually develop? How do strategies form in organizations? How do the
strategies we see in organizations come into being?
There are two main views of strategy development: strategy as deliberate
and strategy as emergent.
The deliberate strategy development view is that strategies come about as
the result of the considered intentions of top management.
The second view is that of emergent strategy development – that
strategies do not develop on the basis of a grand plan, but tend to emerge
in organisations over time.
DELIBERATE STRATEGY DEVELOPMENT
Deliberate strategy involves intentional formulation or planning.
Such intentionality may take different forms. It could be the
intentionality of a strategic leader, for example a CEO or the
founder of a firm. It could be through a process of strategic
planning involving many managers. Or it might be experienced as
the external imposition of strategy formulated elsewhere.
The role of the strategic leader
An organisation’s strategy may be influenced by strategic leaders:
individuals or management teams of individuals whose
personalities, positions or reputations make them central to the
strategy development process.
This could be because she or he is the entrepreneur behind, or
founder and owner of, the organisation.
This is often the case in small businesses and family businesses,
but may also persist when a business becomes very large.
Such is the case with Richard Branson at Virgin Airlines in UK or
Ratan Tata of the Tata Corporation in India. Or it could be that an
individual chief executive has played a central role in directing the
strategy of an organisation, as with Mark Zuckerberg at Facebook.
Strategy, then, may be – or may be seen to be – the deliberate
intention of a strategic leader. This may manifest itself in different
ways:
Strategic leadership as command. The strategy of an organisation
might be dictated by an individual. This is, perhaps, most evident in
single owner-managed small firms, where that individual is in direct
control of all aspects of the business.
Strategic leadership as vision. It could be that a strategic leader
determines or is associated with an overall vision, mission or
strategic intent that motivates others, helps create the shared beliefs
within which people can work together effectively and guides the
more detailed strategy developed by others in an organisation.
Strategic leadership as decision making. Whichever strategy
development processes exist, there could be many different views on
future strategy within an organisation and, perhaps, much, but
incomplete evidence to support those views.
One of the key roles of leaders is to have the ability to weigh such
different views, interpret data, have the confidence to take timely
decisions to invest in key resources or markets and the authority to
get others to buy into those decisions.
Strategic leadership as the embodiment of strategy. A founder or
chief executive of an organisation may represent its strategy. This
may be unintentional but can also be deliberate: for example, Richard
Branson no longer runs Virgin on a day-to-day basis, but he is seen
as the embodiment of the Virgin strategy and is frequently the public
face of the company.
Strategic planning systems
A second way in which intended strategies develop is through
formalised strategic planning: systematic analysis and exploration to
develop an organisation’s strategy.
Larger organisations and corporations often have quite elaborate
strategic planning systems.
Rob Grant noted the following stages in the planning cycle:
Initial guidelines. The cycle’s starting point is usually a set of
guidelines or assumptions about the external environment (e.g. price
levels and supply and demand conditions) and the overall priorities,
guidelines and expectations of the corporate centre.
Business-level planning. In the light of these guidelines, business
units or divisions draw up strategic plans to present to the corporate
centre. Corporate centre executives then discuss those plans with the
business managers usually in face-to-face meetings. On the basis of
these discussions, the businesses revise their plans for further
discussion.
Corporate-level planning. The corporate plan results from the
aggregation of the business plans. This coordination may be
undertaken by a corporate planning department that, in effect, has a
coordination role. The corporate board then has to approve the
corporate plan.
Financial and strategic targets are then likely to be extracted to
provide a basis for performance monitoring of businesses and key
strategic priorities on the basis of the plan.

While larger organisations often have comprehensive strategic

planning systems, smaller ones also use strategic planning. A
prerequisite for entrepreneurial start-ups that need initial external
funding is often to present a detailed strategic business plan.
Externally imposed strategy
Managers may face what they see as the imposition of strategy by
powerful external stakeholders. For example, government may
dictate a particular strategic direction as in the public sector, or
where it exercises extensive regulatory powers in an industry.
In the Ghanaian public sector, direct intervention has been
employed for schools or hospitals deemed to be underperforming
badly, with specialist managers being sent in to turn round the ailing
organisations and impose a new strategic direction.
Businesses in the private sector may also be subject to imposed
strategic direction, or to significant constraints on their choices.
A multinational corporation seeking to develop businesses in some
parts of the world may be subject to governmental requirements to
do this in certain ways, perhaps through joint ventures or local
alliances.
Venture capitalists and private equity firms may also impose
strategies on the businesses they acquire.
EMERGENT STRATEGY DEVELOPMENT
Although strategy development is often described as though it is the
deliberate intention of top management, an alternative explanation
is that of emergent strategy: that strategies emerge on the basis of a
series of decisions which form a pattern that becomes clear over
time.
This explains an organisation’s strategy not as a ‘grand plan’ but as
a developing ‘pattern in a stream of decisions’ where top managers
draw together emerging themes of strategy from various decisions
and directions, rather than formulating it directly from the top.
The pattern that emerges may then subsequently be more formally
described, for example in annual reports and strategic plans, and be
seen as the deliberate strategy of the organisation.
It will not, however, have been the plan that developed the strategy;
it will be the emerging strategy that informed the plan. Emergent
strategy may, then, be seen as a basis for learning of what works in
search for a viable pattern or consistent strategy.
There are different views of emergent strategy: logical
incrementalism, strategy as the outcome of political processes and
strategy as the outcome of organisational systems and routines.
All three emphasise that strategy development is not necessarily the
province of top management alone, but may be more decentralised
within organisations.
Logical incrementalism
Logical incrementalism was a term coined by James Quinn in his
study of how strategies developed in multinational businesses. It
is the development of strategy by experimentation and learning
‘from partial commitments rather than through global
formulations of total strategies’
There are three main characteristics of strategy development in
this way:
Environmental uncertainty. Managers realise that they cannot do
away with the uncertainty of their environment by relying on
analyses of historical data or predicting how it will change. Rather,
they try to be sensitive to environmental signals by encouraging
constant environmental scanning throughout the organisation.
General goals. There may be a reluctance to specify precise
objectives too early, as this might stifle ideas and prevent innovation
and experimentation. So more general rather than specific goals may
be preferred, with managers trying to move towards them
incrementally.
Experimentation. Managers seek to develop a strong, secure, but
flexible, core business. They then build on the experience gained in
that business to inform decisions both about its development and
experimentation with ‘side-bet’ ventures.
Commitment to strategic options may therefore be tentative in the
early stages of strategy development.
Such experiments are not the sole responsibility of top management
and can thus be autonomous. They emerge from what Quinn
describes as ‘subsystems’ in the organisation – groups of people
involved in, for example, product development, product positioning,
diversification, external relations and so on.
Quinn argued that, despite its emergent nature, logical
incrementalism can be ‘a conscious, purposeful, proactive, executive
practice’ to improve information available for decisions and build
people’s psychological identification with the development of
strategy.
Logical incrementalism therefore suggests that strategy development
can be deliberate, whilst relying on organisational subsystems to
sense what is happening in the environment and to try out ideas
through experimentation.
It is a view of strategy development similar to the descriptions that
managers themselves often give of how strategies come about in
their organisations
Arguably, developing strategies in such a way has considerable
benefits.
Continual testing and gradual strategy implementation provide
improved quality of information for decision-making and enable the
better sequencing of the elements of major decisions.
Since change will be gradual, the possibility of creating and
developing a commitment to change throughout the organisation is
increased.
Because the different parts, or ‘subsystems’, of the organisation are
in a continual state of interplay, the managers of each can learn from
each other about the feasibility of a course of action.
Such processes also take account of the political nature of
organisational life, since smaller changes are less likely to face the
same degree of resistance as major changes.
Moreover, the formulation of strategy in this way means that the
implications of the strategy are continually being tested out.
This continual readjustment makes sense if the environment is
considered as a continually changing influence on the organisation.
Given logical incrementalism’s emphasis on learning, it is a view of
strategy development which corresponds to the ‘learning
organisation’ – an organisation that is capable of continual
regeneration from the variety of knowledge, experience and skills
within a culture that encourages questioning and challenge.
Proponents of the learning organisation argue that formal structures
and systems of organisations typically stifle organisational
knowledge and creativity.
They argue that the aim of top management should be to facilitate
rather than direct strategy development by building pluralistic
organisations, where ideas bubble up from below, conflicting ideas
and views are surfaced and become the basis of debate; where
knowledge is readily shared and experimentation is the norm such
that ideas are tried out in action.
The emphasis is not so much on hierarchies as on different interest
groups that need to cooperate and learn from each other. In many
respects, there are similarities here to implications of the variety lens
discussed in the Commentaries.
Strategy as the outcome of political processes
A second explanation of how strategies may emerge is that they are
the outcome of the bargaining and power politics that go on between
executives or between coalitions within an organisation and its major
stakeholders.
Managers may well have different views on issues and how they
should be addressed; they are therefore likely to seek to position
themselves such that their views prevail.
They may also seek to pursue strategies or control resources to
enhance their political status.
The political view of strategy development is, then, that strategies
develop as the outcome of bargaining and negotiation among
powerful interest groups (or stakeholders).
This is the world of boardroom battles often portrayed in film and
TV dramas.
A political perspective on strategic management suggests that the
rational and analytic processes often associated with developing
strategy may not be as objective and dispassionate as they appear.
Objectives may reflect the ambitions of powerful people. Information
used in strategic debate is not always politically neutral. A manager
or coalition may exercise power over another because they control
important sources of information. Powerful individuals and groups
may also strongly influence which issues get prioritised.
In such circumstances, it is bargaining and negotiation that give rise
to strategy rather than careful analysis and deliberate intent. Indeed,
strategic planning processes themselves may provide an arena within
which managers form coalitions to gain influence.
None of this should be surprising. In approaching strategic problems,
people are likely to be differently influenced by at least:
1. Position and personal experience from their roles within the
organisation.
2. Competition for resources and influence between the different
subsystems in the organisation and people within them who are
likely to be interested in preserving or enhancing their positions.
3. The relative influence of stakeholders on different parts of the
organisation. For example, a finance department may be
especially sensitive to the influence of financial institutions whilst
a sales or marketing department will be strongly influenced by
customers.
4. Different access to information given their roles and functional
affiliations.
Strategy as the product of structures and
systems
A third view of how strategies may emerge is on the basis of an
organisation’s structures and systems. Rather than seeing strategy
development as about foresight and anticipation taking form in
directive plans from the top of the organisation, strategy development
can be seen as the outcome of managers, often at lower levels,
making sense of and dealing with problems and opportunities by
applying established ways of doing things.
There are echoes here of logical incrementalism, but there is less
emphasis on deliberate experimentation.
The emphasis is rather on the influence of the structures, systems
and routines with which managers are familiar and which guide and
constrain their decisions. There are different explanations to consider
here:
First, strategy may be steered by how resources are allocated. The
way resources are allocated may direct strategy development and
there are two views of how this may happen: the resource allocation
process (RAP) view of strategy development and the attention-based
view (ABV) of strategy development.
Second, structures and systems set up for one strategy may guide later
strategies. Another explanation of how strategies may emerge on the basis of
structures and systems concentrates on how these may be set up for one
strategy, but then also guide later strategies. Strategies may then emerge based
on prior strategic decisions and related structures and systems that inform or
constrain further strategy development.
This type of strategy development can be expected if a strategy is successful,
as managers seek to maintain a continuity of strategy in a series of strategic
moves, each of which makes sense in terms of previous moves. Figure
Third, culture may influence strategy. Besides the influence from
resource allocation and prior strategic decisions, strategy
development can be shaped by organisational culture.
Strategies may develop as an outcome and continuation of
organisational culture including people’s taken-for-granted
assumptions, routines and behaviours in organisations even
though they may be sub-optimal.
Organisational culture works to define, or at least guide, how
people view their organisation and its environment. It also tends
to constrain what is seen as appropriate behaviour and activity.